Gender pay gap

The gender pay gap is a high-level indicator of the difference between women and men’s earnings. It compares the median hourly earnings of women and men in full and part-time work.

On 15 August 2018, StatsNZ announced that the gender pay gap was 9.2 percent. The gender pay gap has reduced since 1998 (16.3 percent), but has stalled in the last decade. The table at the bottom of this page shows the levels since 1998.

In May 2018, the Ministry for Women released further research, Parenthood and labour market outcomes, which explored the drivers of the gender pay gap from combining administrative wage data, birth records, and survey data on hours worked and earnings. The focus of this research was the role of parenthood penalties on the gender pay gap.

Causes

The causes of the gender pay gap are complex. In the past, a substantial proportion of the gender pay gap was due to factors such as differences in education, the occupations and industries that men and women work in, or the fact that women are more likely to work part-time. We now know these factors only explain around 20 percent of the current gender pay gap.

The majority (80 percent) of the gender pay gap is now driven by what the research calls “unexplained” factors. These are the harder to measure factors, like conscious and unconscious bias – impacting negatively on women’s recruitment and pay advancement – and differences in men’s and women’s choices and behaviours.

Behaviour, attitudes, and biases

Attitudes, biases and behaviours are interrelated.

There are still deeply held societal attitudes and beliefs about the types of work that are appropriate for men and women, the relative importance of occupations where men or women dominate, and the allocation of unpaid work, like caring for children and housework. These attitudes affect not only the choices men and women make around paid and unpaid work, but also the behaviours of others toward men and women who make choices that are not consistent with these traditional beliefs.

Differences in behaviours and choices can include men and women’s willingness to negotiate pay and conditions, and whether employers may treat women differently from men when they do negotiate. Recent research from Australia found that women are willing to negotiate for pay but men are more likely to get a pay increase when they negotiate.

Bias occurs when we automatically, and often unconsciously, use shortcuts and stereotypes that distort, generalise, ignore or emphasise information, and is sometimes described as “fast thinking”. The advantages of fast thinking are speed and efficiency. The disadvantage is that we do not take all the relevant information into account when making a judgement or decision, which can lead to poor-quality decisions.

Bias makes it difficult for women to adapt and succeed in workplaces, because, by its nature, it is extremely difficult to detect, by those who benefit and by those who are disadvantaged. It influences small day-to-day behaviours (like who is called on to offer an opinion or undertake challenging tasks, and whose contributions are positively acknowledged in meetings), as well as decisions on hiring, promotions and setting salaries. While discrimination is against the law, bias can affect decisions people make in ways that they’re not aware of.

Occupational and vertical segregation

Occupational segregation refers to the clustering of female and male workers in particular occupations. For example, women are over-represented in nursing while men are over-represented in construction-related occupations.. Female-dominated occupations tend to be lower paid than those dominated by men. Vertical segregation refers to the fact that a higher proportion of men than women hold senior, higher-paid positions.

Unpaid and caring work

Women and men have different patterns of participation in the paid workforce, principally because women spend a greater proportion of their time on unpaid and caring work than men. When women take career breaks or work part-time it can affect their careers. They accumulate less work experience than men and this can count against them when seeking more responsible or senior positions. Fewer higher-level positions are available on a part-time basis. When women work part-time, they are more likely to miss out on more challenging work and professional development opportunities – both of which increase a person’s chances of advancement. When women return to the paid workforce from career breaks, they often experience difficulty getting their careers back on track.

Fixing the gap

Given the range of causes, the solution is complex. Addressing the causes of the gap requires sustained action over time, including changing societal attitudes and beliefs about women and men, and work.

This requires collective action from a range of participants including workers, employers, careers advisers, business leaders and employee groups, and the government.

Measuring the gender pay gap

There are different methods of measuring the gender pay gap.

Statistics New Zealand calculates New Zealand’s official gender pay gap as the difference between the median hourly earnings of women and men in full and part-time work. It explains its reasons for doing so here.

The State Services Commission calculates a gender pay gap for the public service comparing the average salaries of men and women in full and part-time work.

The OECD monitors the gender wage gaps (a different measure from the gender pay gap) in OECD countries. It compares the median hourly earnings of women and men in full-time work only. Using this measure, New Zealand’s gender wage gap is currently one of the lowest in the OECD.

Regardless of how the gender pay gap is measured, a gap remains between the earnings of women and men.

The overall gender pay gap can also mask important differences in outcomes for groups of women. For instance, Māori and Pacific women have lower rates of pay compared to both women and men of other ethnicities.